10
Sep

Importance of Ratio analysis in Organisations

ratio-analysisDo you know how important is ratio analysis to any company? Are you trying to analyse the business strategies and planning on some new ventures? Then, you will need a ratio analysis to assess the company’s assets and shares. Why wait, when we are there to provide you our services.

The key factors that are needed to run a successful business are effective planning and financial management. Moreover, ratio analysis is vital to understand the various financial transactions, to understand the patterns over time and to gauge the overall financial state of the company.

How useful are the ratios to business development?

 

Ratios are vital quantitative tools used for evaluation and one of their major functions is in their ability to act as indicators to identify both positive and negative trends in finance. The information obtained from these ratio analysis permits a person to make more plans and incorporate new ideas based on its impact in businesses. It also aids in comparison of two or more businesses in market and also with other industries.

Common Size Comparison Ratio

These ratios are very important to make comparison of assets and liabilities owned by the company. These ratios mainly focus on assessing the assets and the percentage of liabilities. Analysis of these ratios for a period or two subsequent years or five years aids in understanding the market trends.

The most commonly used ratios for these analysis are efficiency ratios, turnover ratios, cash and liquidity ratios. Each ratio is used for a different purpose, for example the operating expense compares the expenses such as rent, purchases and advertising costs. Turnover ratios usually indicate a need to analyse the budget for inventories due to the loss of sales in business.

On the other hand, the cash and liquidity ratios help in judging whether a company can afford to invest their money in either capital assets or for long-term business.

What we do for you?

We, at Express Dissertation have a team of highly talented financial professionals who will analyse your company’s data and give a comprehensive analysis on what type of business or investment can be done for succeeding in this field. We provide ratio analysis reports to students who write finance-based dissertations. Feel free to contact us for your work.